Dividend Reinvestment and Share Purchase Plan. Offering Circular April 1, 2010

Transcription

1 Dividend Reinvestment and Share Purchase Plan Offering Circular April 1, 2010 April 1, 2010

2 Table of Contents Summary... 1 Price... 1 The Plan... 2 Shares Offered... 2 Eligible Participants... 2 Eligible Funds... 3 Price of Common Shares Acquired... 3 Administration... 3 Fractional Shares... 4 Optional Cash Payments... 4 Reports to Participants... 4 Dividends... 5 Certificates for Common Shares...5 Termination from Participation in the Plan... 5 Income Tax Consequences... 5 Voting of Common Shares held by the Trustee... 6 Rights Offerings and Stock Splits... 6 Amendment and Termination... 6 Shareholders Outside Canada... 6 Use of Proceeds... 7 Share Capital... 7 Details of Common Shares... 7 Price Range of TransAlta Common Shares... 7 All dollar figures contained in this offering circular are stated in Canadian dollars. Inquiries: CIBC Mellon Trust Company Dividend Reinvestment Services P.O. Box 7010 Adelaide Street Station Toronto, Ontario M5C 2W9 Toll Free:

3 Summary TransAlta Corporation's Dividend Reinvestment and Share Purchase Plan provides a convenient opportunity for holders of its outstanding common shares to purchase common shares of TransAlta Corporation ( TransAlta ). At the option of TransAlta, purchases of such shares will be made in the open market or shares will be issued by TransAlta from treasury. All brokerage or administration costs of the plan will be paid by TransAlta. Investments may be made at the prices and from the funds outlined below. For details please refer to the following pages of this circular. Price For common shares purchased on the open market, 100 percent of the average purchase price 1 for TransAlta common shares acquired from: (i) cash dividends on TransAlta common shares; and (ii) optional cash payments up to $5,000 per quarter. For common shares issued by TransAlta from treasury, 100 percent of the weighted average price ¹ for TransAlta common shares acquired from: (i) cash dividends on TransAlta common shares; and (ii) optional cash payments up to $5,000 per quarter. At the discretion of the Board of Directors of TransAlta, common shares issued from treasury may be subject to a discount of up to five percent of the weighted average price for TransAlta common shares acquired from both reinvested dividends and optional cash payments. TransAlta will advise by way of news release or dividend notice when the discount is applicable. Please note that reinvestment prices can be found on our website at 1 Average purchase price or the weighted average price is defined on page 3 of this offering circular. 1

4 The Plan TransAlta is offer ing an opportunity for holders of its outstanding common shares (the "common shares") to purchase common shares through its Dividend Reinvestment and Share Purchase Plan ( the Plan ). Shares Offered The common shares to be acquired on the dividend payment dates by a participant in the Plan (the Participant ) will be, at the option of TransAlta, (i) issued from treasury, or (ii) purchased in the open market on a stock exchange. The dividend payment dates for common shares are January 1, April 1, July 1 and October 1. Eligible Participants All holders of record of common shares are eligible to participate in the Plan at any time. Any registered holder of record wishing to join the Plan as described in this Offering Circular should complete an Authorization Form and return it to CIBC Mellon Trust (the Trustee"). Participation in the Plan is continuous until termination of participation. Your Authorization Form must be submitted to the Trustee at least 5 business days prior to the record date (the enrollment date ) for your enrollment to be effective on the dividend payment date next following. Authorization Forms received by the Trustee after the enrollment date will not be recorded until the next succeeding enrollment date. The right to participate in and to acquir e c ommon shares under the Plan is not assignable by the holders of common shares. A person who is a beneficial owner of common shares and not an owner of record (i.e. whose shares are held and registered in a nominee account) is able to participate in the plan through CDS and Co. These holders should contact their investment dealers to participate. Should it come to the attention of TransAlta that certain investment dealers are acquiring a substantial number of common shares prior to the dividend record date solely for the purpose of exploiting the arbitrage opportunities which may result from the operation of the Plan, TransAlta may, at its sole discretion, deny access to the Plan to any such investment dealer or any other shareholder engaging in such activities. 2

5 Eligible Funds A Participant may invest in common shares using funds from the following sources: (i) cash dividends on common shares owned by the Participant; (ii) optional cash payments up to $5,000 per quarter. Price of Common Shares Acquired The price of common shares purchased in the open market on behalf of Participants, with eligible funds on the dividend payment dates, will be 100 percent of the average purchase price of the common shares purchased on behalf of the Participants on the investment dates on the Toronto Stock Exchange. Participants will not be charged any brokerage or administration costs. These costs will be paid by TransAlta. The price of common shares issued from treasury on behalf of Participants with eligible funds on the dividend payment dates will be 100 percent of the weighted average price of the common shares traded on the Toronto Stock Exchange during the last five trading days preceding the relevant dividend payment dates ( trading day means a day on which not less than 500 common shares were traded on the Toronto Stock Exchange), or if determined by the Board of Directors, at a discount of up to five percent of the weighted average price. If the discount is applicable, TransAlta will announce by way of news release prior to the record date and/or dividend notice whether common shares purchased under the Plan will be issued from treasury and the amount of the applicable discount. Administration The Plan will be administered on behalf of TransAlta and the Participants by the Trustee. The Trustee will receive eligible funds, purchase and hold the common shares acquired under the Plan and report regularly to the Participants. In the case of stock exchange purchases, the Trustee, as soon as reasonably prudent, will purchase common shares for the Plan. Such purchases may be made on any stock exchange where such shares are traded and may be on such terms as to cost, delivery and otherwise as the Trustee may determine. 3

6 Fractional Shares The Trustee will credit the account of a Participant with fractions of common shares and dividends in respect of such fractions. This allows full investment of eligible funds. Optional Cash Payments On each dividend payment date any funds derived from optional cash payments received by the Trustee from the Participants not less than five business days prior to such dividend payment date, will be applied by the Trustee to the purchase of common shares. The option to make cash payments is available to holders of record each quarter but cannot exceed $5,000 per quarter. Optional cash payments may be made through the use of the Cash Payment Form or the tear-off form attached to each quarterly statement sent to Participants. Optional cash payments must be received by the Trustee no later than five business days preceding the applicable dividend payment date. The same amount of money need not be sent each quarter and there is no obligation to make optional cash payments each quarter. Holders of common shares purchased through the Plan will be holders of record for the next dividend payment. For example, common shares purchased prior to the record date for the January 1 dividend will pay dividends to the holders on April 1. It should be noted that optional cash payments received by the Trustee later than five business days preceding a dividend payment date will be held by the Trustee until the next dividend payment date. No interest will be paid by TransAlta or by the Trustee on any funds received prior to a dividend payment date. Any interest earned on such funds will be applied by TransAlta to defray the costs of the Plan. Reports to Participants Each Participant will receive timely confirmation of purchases. These statements will constitute a continuing record of the cost of common shares and must be retained for income tax purposes. 4

7 Dividends Participants will be credited with dividends on full common shares and on fractions of common shares acquired under the Plan. The accumulated dividends will be reinvested in common shares. The date of acquisition for such common shares will be the dividend payment date on which funds are reinvested. Certificates for Common Shares Common shares purchased under the Plan will be initially held in the name of the Trustee. This convenience protects against loss, theft or destruction of share certificates. The number of common shares credited to an account under the Plan (less any shares delivered to the Participant) will be shown on the Participant s statement of account. Certificates for any number of whole common shares purchased under the Plan will be issued to a Participant upon written request; however, certificates for less than five common shares will not be issued except upon termination of the Plan. Termination from Participation in the Plan To terminate participation in the Plan before the next dividend payment date, a Participant must notify the Trustee in writing prior to the 15th day of the month preceding the respective record date. Following receipt by the Trustee of the notice of termination, certificates for whole common shares credited to the Participant s account will be issued and a cash payment will be made for any fraction of a common share. Income Tax Consequences The reinvestment of cash dividends does not relieve a Participant of any liability for income taxes that may be otherwise payable on such amounts. A Participant will be treated for tax purposes as having received, on the dividend payment date, a dividend equal to the full amount of the cash dividend payable on such date. A Participant who disposes of common shares acquired under the Plan and held as capital property will be taxed on a capital gains basis. For capital gains tax purposes, generally the cost to a Participant of each common share owned is the average cost to such Participant of all such common shares. For this purpose, the cost of a common share credited to the Participant s account in respect of the investment of eligible funds will equal the cost of such shares. 5

8 Voting of Common Shares Held by the Trustee Pursuant to the provisions of the Canada Business Corporations Act, a Participant will be entitled to direct the voting of full common shares credited to the Participant. Fractional common shares cannot be voted by the Participant. Rights Offerings and Stock Splits In the event TransAlta makes available to holders of common shares rights to subscribe for additional common shares or other securities, a Participant s entitlement will be based on such Participant s total holdings on the record date. Any stock splits effected by TransAlta on the common shares will be credited to the accounts of the Participants, excluding fractional shares. Amendment and Termination TransAlta reserves the right to amend, suspend or terminate the Plan at any time. No such amendment or termination shall have retroactive effect. Any amendments to the Plan must be pre-cleared by Toronto Stock Exchange. Shareholders Outside Canada Shareholders resident outside Canada, in countries other than the United States of America, will be eligible to participate in the Plan provided their home country laws do not prohibit it. Funds however, to be reinvested by such shareholders will continue to be subject to withholding or applicable non-resident tax and the amount to be invested will be reduced by the amount of tax withheld. The common shares to be issued to Participants are not registered under the Securities Act of 1933 of the United States of America. Accordingly, the common shares are not being offered for sale in the United States of America or in any of the territories or possessions thereof, and participation in the Plan will not be accepted from any person or his agent who appears to be or who the Trustee or TransAlta has reason to believe is a resident of the United States of America or any of the territories or possessions thereof. 6

9 Use of Proceeds The net proceeds to TransAlta from the sale to Participants from treasury of common shares under the Plan cannot be determined; however, such net proceeds, as and when received, will be used by TransAlta and its subsidiaries to: (i) reduce bank loans from time to time outstanding and repay short term promissory notes incurred for working capital purposes; (ii) provide financing for the capital expenditure and investment programs; and (iii) retire current maturities of bonds and debentures and redeem preferred shares. Share Capital The authorized capital of TransAlta consists of an unlimited number of first preferred shares and common shares, each without nominal or par value. First preferred shares rank in priority to the common shares. TransAlta s common shares are fully paid and non assessable. Details of Common Shares The common shares of TransAlta carry one vote per share. Subject to the prior rights of holders of first preferred shares of TransAlta (if any), the holders of the common shares share ratably in any dividends or distributions to shareholders. Trading of TransAlta Common Shares The common shares of TransAlta trade on the Toronto Stock Exchange and the New York Stock Exchange. S. G. Snyder President and Chief Executive Officer M. St.-Laurent Vice-President and Corporate Secretary 7

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